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One Man's Journey Period.

So, why take a chance? Because I had too. To prove we could do it. Well the first thing was selling my owner on investing in something, he could care less about really. It could be to this day my second best sales pitch I ever pulled off. I had the thing down to the nuts and bolts. It was going to cost us, $135,000 but it would pull in $850,000 the first year at 62% gross margin, do the math. No brainer right? If you do the math it would pull in $323,000 gross margin the first year! Most businesses want a ROI, (return on investment), in 18 to 24 months, what I was proposing was a slam dunk, if we could execute! all production and manufacturing is, is executing in the most efficient way possible. We had a third floor that wasn't even being utilized, well maybe 20% utilized, so what I was proposing was maximize the dead space, which means we weren't earning a dime for this space and because of the investment we would capture every penny spent in 4 months, and not have to add a single person to the staff! No overhead impact, except of course, electricity and inventory, but if managed correctly we would make money. Not to mention, the control of the product quality, ability to forecast and manage the inventory, and increased flexibility.
Well it was better than that. We were selling 25 maybe 26,000 lbs of flavored coffee at the time, making approximately $1.00 pr lb because those nuts were doing it in Norfolk. Well the first year, we increased our sales to 150,000 lbs of coffee at an increased selling price. Do the math, it was costing us $2.69 per/lb, we were selling it for $3.69 per/lb. We went from there, to selling 150,000 lbs, because the quality was so much better at an average selling price of $5.49 pr/lb. That is an increase of $548.500 in gross margin after the cost of the product plus adding 18% for added energy, electrical and whatnot. Not a bad deal for a $135,000 investment, and the beauty was, we could sell another 30%  more without adding anyone or paying any overtime! Wow. That is manufacturing 101. We implemented a line, got it up to 70% capacity in one year, got our money back in a hurry and increased our gross margin by a ridiculous percentage. Now it wasn't the magic pill because we were doing 7 million pounds of coffee at that time, but still a major impact in our over all financial performance within one year. It increased our gross margin by $566,000 annually, because we were doing 6,875,000 lbs the previous year, by implementing this we got to 7,000,000 lbs. That was an increase of 8% of total gross margin for the year. That is not bad. Trust me. Because if you don't have to add a any overhead and you are already profitable, that is what they call incremental profits, which is a beautiful thing in manufacturing. It is all about squeezing out the maximum output at the minimum cost, and we achieved that. I took the dive and surfaced! From then on, I had pretty much free reign, it was a great feeling! I started to think bigger, started to realize, this was what I was put on this earth to do. Those are bad thoughts.



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